City Councilman Peter Vallone Jr. (D-Astoria) said the city is too quick to throw taxpayer money at legal settlements, particularly on lawsuits involving the NYPD.

“At $75,000 a dance, the city’s going to go bankrupt sooner than we thought,” he said. “Here, it looks like it was the taxpayers who got served.”

Caroline Stern, 55, and her boyfriend, George Hess, 54, sued the city in Manhattan federal court last year for their July 2011 arrest, after which they spent 23 hours in custody.

Stern, a dentist, and Hess, a film prop master, had just left Jazz at Lincoln Center’s Midsummer Night’s Swing when they encountered a steel-drum player on a nearly empty platform in the Columbus Circle subway station and began to boogie.

Two cops told them their happy feet weren’t allowed and hauled them off after Stern could produce only a credit card, which did bear a picture of her, as identification.

Stern said she and Hess were happy with the settlement but believes that her arrest, and the legal case that ensued, could have been avoided.

“I’m kind of glad it’s over,” she told The Post. “At the same time, with all the issues with the stopping and frisking people, I think the cops really have to be better trained in dealing with various situations. This was a huge waste of money and time for everybody involved.”

The city doled out $185.6 million in fiscal year 2011, or about $70 per resident, to settle suits against the NYPD, a 35 percent jump from the previous fiscal year, records show.

Vallone, who heads the City Council’s Public Safety Committee, said the settlements have only increased since he took office in 2002.

“Their policy is to settle regardless of the guilt and just throw taxpayer money out there,” he said.

Settling instead of going to court creates a “litigation lottery” mentality that’s too costly to maintain, said Vallone, who wants the city to follow Chicago’s example and fight the majority of suits instead of settling.

Donna Lieberman, head of the New York Civil Liberties Union, said the city needs to learn from suits, not just pay to get rid of them.

“For the city to settle a case, with a wrongful arrest and civil-rights violations for people who were dancing on the subway platform, speaks volumes about policing in the city of New York,” she told The Post.

The city Law Department says there’s no blanket policy on settling.

“Many factors affect the decision to settle a given case, and we decide on an individual basis,” spokeswoman Liz Thomas said.